Hopes that Britain could emerge from recession this year were dealt a blow by data showing that the manufacturing sector shrank at its fastest rate in more than three years last month.

The dismal picture was repeated around the world. In the eurozone, export orders plunged despite the weaker euro, the Chinese manufacturing sector continued to deteriorate, and production growth slowed in the US.

The news will ratchet up pressure on central banks across the globe for a co-ordinated effort to boost market liquidity and drive an economic recovery. This week the Bank of England, the US Federal Reserve and the European Central Bank will hold their monthly meetings to discuss rates and stimulus programmes, such as Britain's quantitative easing programme.

Britain slumped into a double-dip recession at the start of the year and the Office for National Statistics estimates the economy shrank another 0.7% in the second quarter, driven by poor weather and an extra bank holiday over the jubilee weekend. Economists have been betting that the UK will bounce back in the third quarter, but Wednesday's Markit/CIPS purchasing managers' index (PMI) of 45.4 for July – well below expectations of 48.4 – suggests manufacturing will continue to drag on the economy.

The PMI summarises the opinions of purchasing managers in the manufacturing sector, who gauge future demand and adjust orders for materials accordingly. Wednesday's shock reading means orders for materials were dramatically lower, so the outlook for the economy is much worse than previously feared. Substantial falls in new orders, export orders and backlogs of work suggest the sector may contract even more in the coming months.

Howard Archer, of IHS Global Insight, said: "The July purchasing managers' survey is massively disappointing and worrying, indicating that the manufacturing sector's problems are currently running deep. Life is clearly hugely challenging for manufacturers at the moment. Domestic demand for manufactured goods is handicapped by current muted investment intentions, still serious headwinds facing consumers and tightening public spending. Meanwhile, eurozone economic weakness, in particular, is limiting overall foreign demand for UK manufactured goods."

Markit said the PMI figures would not yet show the impact of recent attempts by policymakers to boost the UK economy. It is hoped that the £80bn Funding for Lending scheme, launched on Wednesday, and a further £50bn of quantitative easing announced in July will increase the availability of credit for small businesses and drive output.

In the eurozone, manufacturing activity sank to its lowest point in more than three years. Germany and France were the worst hit as their crisis-hit trading partners cut back on orders. Only Ireland bucked the trend, with output starting to increase again owing to rising exports. Economists said the eurozone was now stuck firmly in recession, with GDP likely to fall again in the third quarter.

Archer said: "The dismal July eurozone purchasing managers' manufacturing surveys piles yet more pressure on the ECB to come up with concrete measures at its policy meeting this Thursday to help ease the eurozone sovereign debt tensions, particularly the pressure on Spain." He expects the central bank to cut interest rates from their record low of 0.75% in September or October.

The impact of the eurozone crisis was felt around the world. In the US, the manufacturing sector grew in July at its slowest pace in nearly three years. Chris Williamson, of Markit, warned the sector could contract in the third quarter if falling export orders and weaker domestic demand persist.

In China, conditions improved marginally in July, nudging the PMI up from 48.2 to 49.3, but it remained below the 50 level that separates growth from contraction. Qu Hongbin, economist at HSBC, said: "This is far from inspiring, as China's growth slowdown has not been reversed meaningfully."